Tether Holdings Ltd. is transitioning past the traditional stablecoin market, and looking to deepen its influence in the gold market.
The cryptocurrency firm, already the world’s largest private holder of gold, announced plans on Wednesday to recruit two senior metals traders from HSBC Holdings (NYSE: HSBC).
According to reports, Vincent Domien, HSBC’s global head of metals trading, and Mathew O’Neill, its head of precious metals origination for Europe, the Middle East, and Africa, will both join Tether in the coming months.
Tether’s expansion follows strong demand for its digital gold product, Tether Gold (XAU₮). The token’s market capitalization surpassed USD$1.44 billion dollars in the third quarter, reflecting rising investor interest in gold-backed digital assets. Each XAU₮ token represents at least one troy ounce of gold, fully backed by physical reserves. As of October’s end, Tether reported holdings of more than 375,000 troy ounces, with over 235,000 tokens already sold.
Meanwhile, competition in the tokenized gold sector is increasing. HSBC launched its own digital gold token in March 2024 and has already processed more than 100,000 transactions. The project’s trading volume has exceeded 1 billion dollars, underscoring the growing crossover between traditional finance and blockchain technology.
Industry analysts say this rapid convergence could redefine how investors trade and store gold. Furthermore, they suggest Tether’s latest moves signal a new phase where digital assets and physical commodities operate in closer alignment.
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Tether Gold is not without risk
Tether Gold offers investors a combination of traditional gold benefits and digital flexibility. Analysts note that it can serve as a hedge against inflation, currency devaluation, and geopolitical uncertainty.
Furthermore, the token provides blockchain advantages, including 24/7 liquidity and easy global transfers. Technical indicators for Tether Gold show a generally bullish trend, with moving averages signaling “Buy” or “Strong Buy” in several time-frames. In addition, adoption is increasing in emerging markets, where tokenized gold is becoming more accessible to a wider audience.
However, Tether Gold carries certain risks. While Tether Limited claims each token is backed by physical gold, independent audits are limited, leaving some uncertainty about the reserves.
Additionally, the token may trade at a premium or discount compared with actual gold prices. Gold itself remains volatile, and Tether Gold may not track the metal perfectly at all times.
Regulatory changes affecting Tether Limited or the broader stablecoin market could also impact investors. Consequently, analysts caution that tokenized gold should be treated as a niche allocation rather than a direct replacement for physical bullion or traditional gold ETFs.
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